Suncity Group, a gambling facilitator and all-inclusive resort operator, announced that its income in the initial six months of 2020 declined by nearly 70% in comparison to the same period in the previous year. Nevertheless, the fair value gain associated with convertible bonds considerably lessened the company’s net loss for the period.
The company’s income for the six-month period ending on June 30th dropped to 93.7 million yuan (approximately $13.8 million). Of this amount, 77.4 million yuan originated from customer contracts, while 16.3 million yuan stemmed from rental property.
The majority of Suncity’s income in the first half of the year was derived from Macau, contributing 62.5 million yuan, representing a decrease of 74.4%. Vietnam generated an additional 10.9 million yuan, where the company is providing management services for the newly established Hoi An integrated resort. Cambodia contributed 1.2 million yuan, and China property rentals yielded 2.8 million yuan.
The reduction in income resulted in a 74.2% decrease in the cost of goods sold to 65.8 million yuan, leading to a gross profit of 28 million yuan, a decline of 45.8%.
However, Suncity’s pre-tax loss was significantly reduced from 1.26 billion yuan to 204.9 million yuan.
Although the firm experienced a financial setback of RMB 332 million stemming from fluctuations in the fair value of investment properties, escalated losses from joint ventures, and amplified administrative outlays, it partially mitigated these losses through fair value gains from derivative financial tools.
This is linked to the company’s convertible bonds, which appreciated in value by RMB 5.882 billion, following a devaluation of RMB 10.7 billion in the initial six months of 2019. After subtracting a tax credit of RMB 81.2 million, Suncity’s net deficit for the first six months of the year amounted to RMB 1.232 billion, in contrast to RMB 12.5 billion in the first half of 2019.
This surpassed the company’s projected net loss of RMB 108 million last month.
Suncity Chairman Alvin Chau remarked, “Undeniably, the first half of the year has been a challenging period, as the COVID-19 pandemic is impacting all facets of the economy – travel limitations, business shutdowns, and stock market downturns.”
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